Business activity in the eurozone picked up in April and grew at its fastest pace in nearly a year thanks to "increasingly robust" growth in the dominant services sector, which more than offset a deeper downturn in manufacturing, a closely watched survey showed Tuesday.

The divide between services firms and factories was also evident in the country breakdown for Germany and France, the bloc's two biggest economies and the only ones to publish preliminary readings of the survey.

HCOB's preliminary composite eurozone Purchasing Managers' Index (PMI), compiled by S&P Global, bounced to 51.4 this month from March's 50.3.

It was the highest in 11 months. Any reading above 50 indicates growth, while a figure below it shows contraction.

The reading was well ahead of expectations in a Reuters poll for 50.7 and marking its second month above the 50 level separating growth from contraction.

"The euro area economy has returned to growth. The PMI for the services sector rose further in April... However, the picture is clouded by the unexpected decline in the manufacturing index," said Christoph Weil at Commerzbank.

The survey showed activity was growing "modestly" as manufacturing output continued to fall, although the decline was not as steep as previously.

"Increasingly robust service sector growth was nevertheless accompanied by signs of a further moderation of the manufacturing downturn," S&P Global said.

The flash services PMI soared to 52.9 from last month's 51.5, ahead of all expectations in the Reuters poll which had a median forecast for a more modest rise to 51.8.

But the manufacturing PMI dropped to 45.6 from 46.1, confounding expectations for a lift to 46.6. It has been below 50 since mid-2022.

An index measuring manufacturing output did, however, nudge up to 47.3 from 47.1.

Indexes measuring demand also highlighted the division between the two sectors. The services new business index rose to an 11-month high of 52.1 but the manufacturing new orders reading fell to a four-month low of 43.8 from 46.

Private sector activity in Germany, Europe's largest economy, returned to growth this month, driven by a solid rise in activity in the country's service sector and an easing in the rate of decline in factory production.

In France the dominant services industry expanded for the first time in almost a year, helping offset continued weakness in manufacturing.

Meanwhile in Britain, outside the European Union, businesses recorded their fastest growth in activity in nearly a year, pointing to a bigger rebound from last year's shallow recession than economists had been expecting.

Overall optimism across the eurozone remained strong and firms increased headcount at the fastest pace since June last year. The composite employment index rose to 51.8 from 50.9.

Economists said the data shows the 20-nation single currency is pulling out of the recent downturn, but the European Central Bank (ECB) would still cut interest rates in June.

"The bigger-than-expected increase ... suggests that the euro-zone is coming out of recession, but this will not prevent the ECB from cutting interest rates in June," Andrew Kenningham of London-based consulting firm Capital Economics.

"While these surveys are good news for the economy, we suspect that any growth will be remain quite weak in the near term," he added.

The ECB hiked rates at a record pace to tame red-hot price rises, but there are now growing calls to cut as eurozone inflation approaches the institution's 2% target. Inflation slowed to 2.4% in March.